Meta still spends billions on outside GPUs. Despite its internal work, Meta depends heavily on market leader Nvidia Corp. for chips. Deal terms are not public. But in August, Meta wants to cut Nvidia relianceMeta wants to cut Meta’s chip progress is too slow for CEO Mark Zuckerberg. People familiar with the matter said Zuckerberg is not happy with the pace, and leadership has been searching for outside help to boost the work. The Meta spokesperson disagreed. The company said, “our custom silicon work is pr ...

Core Insights - Nvidia has become the world's first $4 trillion company, driven by significant investments in AI infrastructure and its GPUs [1][2] - Nvidia faces challenges from competitors improving their price performance and its major customers developing custom silicon for AI applications [2][6] - Microsoft is positioned to potentially reach a $4.5 trillion market cap, with strong growth in Azure cloud computing and AI tools [3][12] Nvidia's Market Position - Nvidia is the leader in AI chip development, supported by advanced technology and proprietary software like CUDA [5] - Major customers like Meta and Microsoft are reducing reliance on Nvidia by developing their own chips for AI training [6][7] - Despite challenges, Nvidia's position is currently secure, especially with the U.S. reversing its ban on certain chip sales to China, which is expected to boost earnings [9][10] Microsoft as a Competitor - Microsoft is the closest competitor to Nvidia, with a market cap of approximately $3.8 trillion and potential for growth [12] - Analysts are optimistic about Microsoft's Azure revenue growth, driven by demand for AI computing power [13][14] - The potential of Microsoft's Copilot Studio could enhance its enterprise software offerings and increase cash flow for further investments [15][16] Valuation Perspectives - Nvidia's stock trades at a premium, nearing 40 times forward earnings estimates, which may limit its growth compared to other AI companies [10] - Microsoft shares are also considered expensive at about 33 times forward earnings, but this is justified by its leadership in AI and cloud computing [16] - Oppenheimer analysts have updated Nvidia's price target to $200 per share, suggesting a market cap of $4.9 trillion, but Microsoft is viewed as a more attractive investment at current prices [17]